More Information regarding Short Sales vs. Foreclosures

by on April 17, 2009

Actually there are 4 possible options for anyone who is facing a problem with their loan, with their home being upside down, etc.

Option 1: Loan Modification

Option 2: Deed in Lieu of Foreclosure

Option 3: Short Sale

Option 4: Foreclosure

Let’s discuss each one of these options in more detail…

Option 1: Loan Modification – as we all know, there has been a lot of talk about this recently with the program unveiled by the Obama administration. Many banks and lending institutions have been sending out notices to their borrowers stating that if they are having problems with their mortgage payment, to contact them and they will try to work something out.

If you are having trouble or think you will have trouble when your loan re-adjusts, please contact your lender directly. Save yourself thousands of dollars and do it on your own. You do not need a lawyer or a loss mitigation department to do it for you!

Visit this website and download the information,, it’s free. You’ll be glad you did.

Option 2: Deed in Lieu of Foreclosure – this means that you are deeding the property back to the lender in exchange for their forgiveness on any arrears that you have on said property. This helps you avoid foreclosure, saves your credit, insures that you are not liable for any losses.

The only problem is if you have a 2nd trust deed on the house with another lender, you will have to negotiate with them for a settlement.

Also, in most cases the lender will want you to try to sell the house as a short sale for at least 2-3 months to demonstrate that you did all that you could to satisfy your obligation.

Option 3: Short Sale – this is an arrangement made with the lender in which they agree to accept an amount of money lower than the note held on said property.

There are a couple of key points which need to be made on this: The homeowner can not make any money from the sale; the homeowner must be facing some sort of hardship.

Option 4: Foreclosure – this is the worst possible option as it lowers your credit score 200-300 points and stays on your credit for at least 7 years and in some cases it has been reported to affect credit by as many as 10 years. It is worse than a bankruptcy.

Even in this situation there are many key points which you need to understand as it will help you to come out of this in a much better position than you might think. Having a plan, if this is your only viable option, is KEY!

That is where an educated Real Estate professional is VITAL!

I’m here to help. Call me and gain the knowledge you need to make the best of a difficult situation.


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